Patent Misclassification & Consequences
Classifications of a patent play a major role in categorization of patents so that it is easy to analyze different technology domains. There are different classification systems which are separate for utility and design patents; for example, International Patent Classification (IPC), Cooperative Patent Classification (CPC) and US classification system for Utility patents and Locarno Classifications and National Classification system for design patents. Classifications of a patent define a hierarchical relationship of the patent domain with respect to its sub-domain that helps easy to study the patent, for instance a patent that claims a hybrid wind-PV (Photo-Voltaic) system, in CPC, it is classified under H02S10/12. A hierarchical relationship of the CPC patent classification is defined below.
What if a patent is classified under wrong classification? Or if some of the sub-classifications are missed during technology categorization? This article will shed some light on the consequences of wrong classification.
If a patent is assigned with wrong classification, the probability to capture the patent in a novelty search during examination of a similar invention is reduced. Novelty search helps in ascertaining whether an invention is novel. If a relevant patent is already available and due to incorrect classification, if it gets missed then it might be difficult for the invention being studied. The invention might get a patent but its probability to get invalidated increases at a later stage.
Many patent offices (such as USPTO) around the world outsource patent classification work to government agencies or use machine learning (ML) based tools. There have been incidents in the past that many patents were incorrectly classified because of error on the part of outsourced agencies. Errors can also occur due to malfunctioning of ML tools. Although the patent owners can apply for a correction, the whole process delays the overall prosecution period.
Additional Office Action Cost
An incorrectly categorized patent application may land at the desk of an examiner who does not have a sound expertise in the technology domain. This happens rarely at the patent offices, and they usually take corrective actions themselves. However, for very closely related technology domains e.g., material science and chemistry, it may be challenging for examiner to understand the novelty of your invention. As a result, many non-final rejections may come, and this increases the cost of examination/prosecution due to multiple office actions.
Freedom to Operate (FTO)
Freedom to Operate (FTO) study helps to decide whether a product can be launched in a market without infringing on any patent. Missing a single patent during FTO study can cost millions of dollars. It can be difficult to identify an incorrectly categorized patent or publication, which may pose a threat in a longer run. A keyword-based search, citation analysis and relevant assignee/inventor search can be performed to minimize such risks.
A patent has more value in market if its visibility or valuation is high. Patent forward citation plays a major role during its portfolio mining and valuation. From the perspective of an inventor and assignee of a patent, it is very important to have many forward citations, as forward citation implies that the patent is considered as a base to add further value to a technology. More the number of forward citations, more is the opportunity for licensing-out (or salability) of the patent. Correct classification of a patent directly relates to more possible forward citations in comparison to wrong ones. Incorrectly classified patent may be under-valued during valuation study due to lack of ideal forward citations.
There are many companies or investors that acquire patents to add value to their patent portfolio. From the perspective of a company or an investor who is looking for a high valued patent, it might be a lost opportunity to miss a patent that adds more value to a technology but misinterpreted due to incorrect classification.
Hierarchical Progress of Technologies
It is very important to link technologies from source to different advancements for example considering a wheel that has witnessed much advancement since it was first designed. If a technology analyst has to analyze different advancements in the wheel, it is important for him to have a correct list of patents that will conclude a correct order for taking decisions like in R&D, identifying white spaces, etc. Therefore, it again becomes crucial to increase the probability of identifying a patent and wrong classification can hamper it.
Standard Essential Patents (SEPs) Identification
The digital technology around the globe updates every six months. Many new devices or systems are emerging on a weekly basis. For such a fast-paced technology movement, it is difficult for patent offices to keep updated with classifications for newer domains. As a result, many Standard Essential Patents are categorized in older classifications. And due to this, it becomes difficult to identify SEPs during studies like FTOs etc.
Increasing Misclassified Set of Patents
It is very important to update classification system time to time because there are many cases in which patents are not classified correctly because updated classification is not available for latest technologies that were not present earlier. This leads to increase in wrong patent set in those classifications where these latest technology-based patents are classified.
Errors are a part of any system, and 100% prevention of patent misclassification can be difficult. However, some steps can be followed by patent owner and a patent searcher. The patent owner may request the patent office (PTO) to review the assigned classifications and suggest some modification and updates. From a searcher perspective, it is necessary to look for an exhaustive combination of classification-based search, keywords-based search, and semantic search. It may be difficult to capture wrong classified patents through keyword-based search when a patent is filed in non-English language, but steps can be followed to remove translation-based errors. Further, the classification system should be updated regularly so that updated and new technologies can also be classified correctly.
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